It's useful background to help understand some of the things you'll see happen over the next couple of weeks.

The union chief, the missing tender and the channel out to the sea

By MICHAEL SMITH AND HEDLEY THOMAS

THEAUSTRALIAN

11:00PM MARCH 21, 2014

IN the heady years of Brian Burke’s Labor government, Western Australia was like a different country for corporate heavyweights and entrepreneurs. Big deals, big money and a welcoming premier made sure all comers - and particularly the likes of Alan Bond, Laurie Connell, Dallas Dempster and Warren Anderson - knew WA was uniquely open for business.

This was the era of WA Inc. By 1990, Burke was gone. His successor, Peter Dowding, was gone. And the then Labor premier, Carmen Lawrence, was dealing with daily scandalous disclosures and political blood-letting. Under immense public pressure, in November 1990 she announced her intention to appoint a royal commission “to inquire into certain matters” concerning how government and corporations conducted themselves.

Just months later in May 1991, Bruce Morton Wilson was appointed state secretary of the Australian Workers Union, West Australian branch.

The AWU was WA’s largest trade union and controlled a substantial block of votes that directed the Labor Party’s affairs. As Wilson took on the state secretary’s job, his days had as their backdrop newspaper, radio and television coverage of the WA Inc hearings on corruption in government and business in the state.

Seventeen months after Wilson’s appointment, the royal commission brought down its report. It stated: “The commission has found conduct and practices on the part of certain persons involved in government in the period 1983 to 1989 such as to place our government system at risk. Unfortunately, some of that conduct and some of those practices were peculiar to Western Australia.

“Some ministers elevated personal or party advantage over their constitutional obligation to act in the public interest.

“Personal associations and the manner in which electoral contributions were obtained could only create the public perception that favour could be bought, that favour would be done ave observed that the size of the donations was quite extraordinary.”

Wilson and those around him were apparently undaunted by the WA Inc royal commission. Perhaps its hearings inspired some who thought: “Why not me, too?” What we know for certain is that during those 17 months, Wilson and friends set about constructing an elaborate network of slush funds, pay-offs and a formidable reputation for delivering industrial strife or peace - at a price.

Wilson came to national prominence when he led the occupation of Woodside Petroleum’s North Rankin A gas platform off WA’s Pilbara region in 1986, cutting gas supplies to state’s industry.

The company said Wilson’s actions in occupying and ordering Woodside management to leave the platform were acts of piracy under maritime law. They attracted international attention, and prime minister Bob Hawke was incensed.

Despite appearing to overplay his hand with Woodside in 1986, Wilson continued his rise in the union movement with patronage from Graeme Campbell, who was the federal Labor MP for Kalgoorlie, as well as Labor state minister Julian Grill, who was serving in Burke’s government and remained a minister until 1990.

Wilson’s goal, according to Campbell, was to become secretary of the state branch of the AWU, then national secretary and, finally, prime minister.

But as Wilson’s stocks rose within the AWU, suspicions of fraud - mainly based on allegations that he forced employers to pay “hush money” in exchange for industrial peace - began to emerge.

In May 1991, Wilson became AWU state secretary. And Lawrence’s Labor government was on the lookout for good news.

The Peel Harvey estuary lies just inland from the Indian Ocean at Dawesville, about 80km south of Perth. The 136sq km of estuary waters average no more than 2m deep and the combination of sunlight and nutrient-rich, heated stagnant water caused vast algal blooms across the system. It stank.

From 1983, the Burke Labor government had promised a channel to connect the estuary to the Indian Ocean to allow tidal movement to flush the system. There were promises of land resumptions for the course of the channel and public tenders for the engineering works.

In 1986, the WA government estimated the cost of the engineering works to build the channel at $54.2 million and it promised it would let contracts to build the channel.

The years 1986 to 1989 must have been very poor for growing algae in Dawesville, as interest in the project waned and the algae refused to bloom.

In August 1989, then WA ALP secretary and future defence minister Stephen Smith wrote on Labor Party letterhead to Ian Taylor MLA, the minister for land management, to seek his urgent response to the Labor Party’s committee resolution to defer the project and try tree-planting instead. The environment minister had already made his call. The government had announced in June that the channel would be put on hold while other environmental options were considered.

The algae returned with a vengeance and by January 1990 the heavy earthmoving options were back on again.

The estuary had become silted and virtually land-locked with minimal tidal flows of sea water from the Indian Ocean just hundreds of metres away.

Agricultural run-offs flowing into the nutrient-rich warm waters were easily heated by the summer sun to produce overpowering algal blooms, which converted the tepid, stagnant waters beneath into a putrid dead zone.

The growing town of Mandurah at the northern reaches of the system and the coastal area next to it showed real potential for residential development - but even the best of WA’s developers found it hard to sell property with 136sq km of stinking mess and dead sea life adjacent. The Harvey, Serpentine and Murray rivers emptied into the wetland and the tiny natural opening to the Indian Ocean just south of Mandurah would never deliver sufficient tidal flow to flush away the algal blooms.

Transport minister Bob Pearce said in early 1990: “The government has given the final approval for work to start on the Dawesville Cut early next year.”

Work was ready to start in 1991. And so was Wilson.

When Lawrence went to the town of Mandurah, south of Perth, with her cabinet on July 29, 1991, there was good news for the local community - a major infrastructure project, the Dawesville Channel, would soon begin.

As the premier’s media statement disclosed: “Dr Lawrence said tenders for the work would be called in mid-September. The Dawesville Channel is one of the biggest maritime engineering projects to be undertaken in Western Australia.”

In August 1991, Lawrence delivered her government’s 1991-92 budget. She said: “An allocation of $3.1m from the capital works program will allow further acquisition of land along the alignment of the Dawesville Channel and provide for construction work to commence on the rock walls at the ocean entrance.”

In September, WA government officials reiterated that competitive tenders would soon be called from capable contractors willing to bid for the construction work.

But on November 25, 1991, Lawrence’s cabinet met and resolved to announce that a “turnkey” contract had been awarded to the company Wannunup which, according to the then transport minister, would engage Thiess Contractors to build the channel substantially on Wannunup’s privately owned land.

It would cost the taxpayers almost $60m.

What is also clear is that Thiess Contractors would soon start to pay AWU boss Wilson’s AWU Workplace Reform Association Inc, a secret slush fund, substantial sums of money, and continue to pay for months after the Dawesville project was completed.

Why was there no public tender as originally promised for such a significant project? Why did the WA government enter into a contract directly with Thiess? And what did Thiess get in return for the $300,000 it paid to Wilson?

On November 28, 1991 transport minister Pam Beggs told the WA parliament that cabinet had decided to abandon plans to seek competitive tenders for the construction work, instead opting to accept a “turnkey” contract proposal from the landowner.

Beggs: “The estimated cost of the government’s building the channel had been $76.8m, and the major reason for the lower cost (almost $60m) under the total construction package stems from having a single contractor responsible for all site works. This introduces an economy of scale and enables the significant construction risk to be spread over a wider scope or work. The agreement between the government and Wannunup has widespread support, including, I understand, even the member for Mandurah.”

But with no competitive tender, the government was guessing. The major reason for Thiess getting the job, according to Wilson’s AWU sidekick Ralph Blewitt, was that Wilson demanded it.

Inquirer has inspected internal WA government documents from the period that raise the sort of questions Blewitt’s allegations raise.

Before Thiess being given the job without a public tender, WA contractors, indeed companies as far afield as Singapore, were watching very closely the government’s progress towards “completing tender documents in order to let a contract for the undertaking of work”. WA government files show letters from at least a dozen potential tenderers for the work.

The documents show that while the government stuck to its public policy position of acquiring some of the land for the Dawesville Channel, then seeking tenders for the construction work, it was privately discussing an exclusive arrangement with the major landholder, Wannunup Developments Pty Ltd.

On July 5, 1991, John Jenkin, executive director of the marine and harbours department, wrote a briefing note for his boss, transport minister Beggs. He said Wannunup Developments had submitted its development proposal for assessment by his department. He concluded his report with: “In terms of return to government, the Wannunup Developments proposal falls short of the value capture previously believed to be equitable. However, this proposal and all other options are still being evaluated.”

A little more than a fortnight later, he wrote to her again with a somewhat cryptic report.

“I have established that the submission received by the minister for state development was made in response to a general approach to the development industry by the Department of State Development for information on projects which may be of assistance in stimulating the economy. It is a summary of information received from Wannunup Developments.

“The figure of $20m as a claimed saving is arbitrary and set on a different basis of calculation compared to department estimates so far. The department’s estimate of $76.8m for the overall construction cost takes into account inflation over a five-year project. This extended construction time was to fit in with government budget priorities.”

Jenkin went on to describe a range of shortcomings in Wannunup’s proposal that had been put to the minister for state development, Ian Taylor.

Jenkin said: “If Wannunup is seeking to minimise its cost at the expense of public investment in the channel, then the government should consider the total resumption of the area.”

By the end of July 1991, the Wannunup Developments proposal to develop the Dawesville Channel had been formally assessed by Treasury and government engineers.

By early September the WA government’s Treasury and Crown Solicitors departments had reviewed the Wannunup proposal. The three-page submission from Thiess is included, unchanged in the papers Treasury reviewed. In the final analysis, the public servants left the matter of whether to accept Wannunup’s proposal to Lawrence’s cabinet.

In late September the marine and harbours bureaucrats still maintained the public position that tenders would be called for the Dawesville works.

On a still day when the Indian Ocean is calm, the Dawesville Channel is a beautiful waterway lined with natural-looking limestone and other local rocks.

Even when the winds roar in from the ocean, it’s easy to forget that the 2.5km, 200m wide waterway was dry land just 20 years ago - part of a continuous strip of coastal land that ran south from Mandurah for about 50 unbroken kilometres.

In a few weeks, it will be 20 years since its opening in April, 1994, by the then newly minted Liberal Party premier, Richard Court, and his transport minister Eric Charlton.

The fresh ocean waters have worked wonders for the estuary over those 20 years - and with the new road, new bridge, marinas and clear, blue clean waters, the surrounding land became a very marketable product.

Asked for comment about the claims of Ralph Blewitt and Hugh Morgan, Lawrence said yesterday: “This does not ring true.” She said she had not had time to refresh her memory on the events. She said she did not wish to make further comment until she had recollected the circumstances surrounding the matters that The Australian emailed her about on Thursday.

Comments

Setting the scene for the next few weeks - WA in 1991/92 was ripe for Bruce Wilson's secret commission scheme with Thiess

This story was published in The Australian in March, 2014.

It's useful background to help understand some of the things you'll see happen over the next couple of weeks.

The union chief, the missing tender and the channel out to the sea

By MICHAEL SMITH AND HEDLEY THOMAS

THEAUSTRALIAN

11:00PM MARCH 21, 2014

IN the heady years of Brian Burke’s Labor government, Western Australia was like a different country for corporate heavyweights and entrepreneurs. Big deals, big money and a welcoming premier made sure all comers - and particularly the likes of Alan Bond, Laurie Connell, Dallas Dempster and Warren Anderson - knew WA was uniquely open for business.

This was the era of WA Inc. By 1990, Burke was gone. His successor, Peter Dowding, was gone. And the then Labor premier, Carmen Lawrence, was dealing with daily scandalous disclosures and political blood-letting. Under immense public pressure, in November 1990 she announced her intention to appoint a royal commission “to inquire into certain matters” concerning how government and corporations conducted themselves.

Just months later in May 1991, Bruce Morton Wilson was appointed state secretary of the Australian Workers Union, West Australian branch.

The AWU was WA’s largest trade union and controlled a substantial block of votes that directed the Labor Party’s affairs. As Wilson took on the state secretary’s job, his days had as their backdrop newspaper, radio and television coverage of the WA Inc hearings on corruption in government and business in the state.

Seventeen months after Wilson’s appointment, the royal commission brought down its report. It stated: “The commission has found conduct and practices on the part of certain persons involved in government in the period 1983 to 1989 such as to place our government system at risk. Unfortunately, some of that conduct and some of those practices were peculiar to Western Australia.

“Some ministers elevated personal or party advantage over their constitutional obligation to act in the public interest.

“Personal associations and the manner in which electoral contributions were obtained could only create the public perception that favour could be bought, that favour would be done ave observed that the size of the donations was quite extraordinary.”

Wilson and those around him were apparently undaunted by the WA Inc royal commission. Perhaps its hearings inspired some who thought: “Why not me, too?” What we know for certain is that during those 17 months, Wilson and friends set about constructing an elaborate network of slush funds, pay-offs and a formidable reputation for delivering industrial strife or peace - at a price.

Wilson came to national prominence when he led the occupation of Woodside Petroleum’s North Rankin A gas platform off WA’s Pilbara region in 1986, cutting gas supplies to state’s industry.

The company said Wilson’s actions in occupying and ordering Woodside management to leave the platform were acts of piracy under maritime law. They attracted international attention, and prime minister Bob Hawke was incensed.

Despite appearing to overplay his hand with Woodside in 1986, Wilson continued his rise in the union movement with patronage from Graeme Campbell, who was the federal Labor MP for Kalgoorlie, as well as Labor state minister Julian Grill, who was serving in Burke’s government and remained a minister until 1990.

Wilson’s goal, according to Campbell, was to become secretary of the state branch of the AWU, then national secretary and, finally, prime minister.

But as Wilson’s stocks rose within the AWU, suspicions of fraud - mainly based on allegations that he forced employers to pay “hush money” in exchange for industrial peace - began to emerge.

In May 1991, Wilson became AWU state secretary. And Lawrence’s Labor government was on the lookout for good news.

The Peel Harvey estuary lies just inland from the Indian Ocean at Dawesville, about 80km south of Perth. The 136sq km of estuary waters average no more than 2m deep and the combination of sunlight and nutrient-rich, heated stagnant water caused vast algal blooms across the system. It stank.

From 1983, the Burke Labor government had promised a channel to connect the estuary to the Indian Ocean to allow tidal movement to flush the system. There were promises of land resumptions for the course of the channel and public tenders for the engineering works.

In 1986, the WA government estimated the cost of the engineering works to build the channel at $54.2 million and it promised it would let contracts to build the channel.

The years 1986 to 1989 must have been very poor for growing algae in Dawesville, as interest in the project waned and the algae refused to bloom.

In August 1989, then WA ALP secretary and future defence minister Stephen Smith wrote on Labor Party letterhead to Ian Taylor MLA, the minister for land management, to seek his urgent response to the Labor Party’s committee resolution to defer the project and try tree-planting instead. The environment minister had already made his call. The government had announced in June that the channel would be put on hold while other environmental options were considered.

The algae returned with a vengeance and by January 1990 the heavy earthmoving options were back on again.

The estuary had become silted and virtually land-locked with minimal tidal flows of sea water from the Indian Ocean just hundreds of metres away.

Agricultural run-offs flowing into the nutrient-rich warm waters were easily heated by the summer sun to produce overpowering algal blooms, which converted the tepid, stagnant waters beneath into a putrid dead zone.

The growing town of Mandurah at the northern reaches of the system and the coastal area next to it showed real potential for residential development - but even the best of WA’s developers found it hard to sell property with 136sq km of stinking mess and dead sea life adjacent. The Harvey, Serpentine and Murray rivers emptied into the wetland and the tiny natural opening to the Indian Ocean just south of Mandurah would never deliver sufficient tidal flow to flush away the algal blooms.

Transport minister Bob Pearce said in early 1990: “The government has given the final approval for work to start on the Dawesville Cut early next year.”

Work was ready to start in 1991. And so was Wilson.

When Lawrence went to the town of Mandurah, south of Perth, with her cabinet on July 29, 1991, there was good news for the local community - a major infrastructure project, the Dawesville Channel, would soon begin.

As the premier’s media statement disclosed: “Dr Lawrence said tenders for the work would be called in mid-September. The Dawesville Channel is one of the biggest maritime engineering projects to be undertaken in Western Australia.”

In August 1991, Lawrence delivered her government’s 1991-92 budget. She said: “An allocation of $3.1m from the capital works program will allow further acquisition of land along the alignment of the Dawesville Channel and provide for construction work to commence on the rock walls at the ocean entrance.”

In September, WA government officials reiterated that competitive tenders would soon be called from capable contractors willing to bid for the construction work.

But on November 25, 1991, Lawrence’s cabinet met and resolved to announce that a “turnkey” contract had been awarded to the company Wannunup which, according to the then transport minister, would engage Thiess Contractors to build the channel substantially on Wannunup’s privately owned land.

It would cost the taxpayers almost $60m.

What is also clear is that Thiess Contractors would soon start to pay AWU boss Wilson’s AWU Workplace Reform Association Inc, a secret slush fund, substantial sums of money, and continue to pay for months after the Dawesville project was completed.

Why was there no public tender as originally promised for such a significant project? Why did the WA government enter into a contract directly with Thiess? And what did Thiess get in return for the $300,000 it paid to Wilson?

On November 28, 1991 transport minister Pam Beggs told the WA parliament that cabinet had decided to abandon plans to seek competitive tenders for the construction work, instead opting to accept a “turnkey” contract proposal from the landowner.

Beggs: “The estimated cost of the government’s building the channel had been $76.8m, and the major reason for the lower cost (almost $60m) under the total construction package stems from having a single contractor responsible for all site works. This introduces an economy of scale and enables the significant construction risk to be spread over a wider scope or work. The agreement between the government and Wannunup has widespread support, including, I understand, even the member for Mandurah.”

But with no competitive tender, the government was guessing. The major reason for Thiess getting the job, according to Wilson’s AWU sidekick Ralph Blewitt, was that Wilson demanded it.

Inquirer has inspected internal WA government documents from the period that raise the sort of questions Blewitt’s allegations raise.

Before Thiess being given the job without a public tender, WA contractors, indeed companies as far afield as Singapore, were watching very closely the government’s progress towards “completing tender documents in order to let a contract for the undertaking of work”. WA government files show letters from at least a dozen potential tenderers for the work.

The documents show that while the government stuck to its public policy position of acquiring some of the land for the Dawesville Channel, then seeking tenders for the construction work, it was privately discussing an exclusive arrangement with the major landholder, Wannunup Developments Pty Ltd.

On July 5, 1991, John Jenkin, executive director of the marine and harbours department, wrote a briefing note for his boss, transport minister Beggs. He said Wannunup Developments had submitted its development proposal for assessment by his department. He concluded his report with: “In terms of return to government, the Wannunup Developments proposal falls short of the value capture previously believed to be equitable. However, this proposal and all other options are still being evaluated.”

A little more than a fortnight later, he wrote to her again with a somewhat cryptic report.

“I have established that the submission received by the minister for state development was made in response to a general approach to the development industry by the Department of State Development for information on projects which may be of assistance in stimulating the economy. It is a summary of information received from Wannunup Developments.

“The figure of $20m as a claimed saving is arbitrary and set on a different basis of calculation compared to department estimates so far. The department’s estimate of $76.8m for the overall construction cost takes into account inflation over a five-year project. This extended construction time was to fit in with government budget priorities.”

Jenkin went on to describe a range of shortcomings in Wannunup’s proposal that had been put to the minister for state development, Ian Taylor.

Jenkin said: “If Wannunup is seeking to minimise its cost at the expense of public investment in the channel, then the government should consider the total resumption of the area.”

By the end of July 1991, the Wannunup Developments proposal to develop the Dawesville Channel had been formally assessed by Treasury and government engineers.

By early September the WA government’s Treasury and Crown Solicitors departments had reviewed the Wannunup proposal. The three-page submission from Thiess is included, unchanged in the papers Treasury reviewed. In the final analysis, the public servants left the matter of whether to accept Wannunup’s proposal to Lawrence’s cabinet.

In late September the marine and harbours bureaucrats still maintained the public position that tenders would be called for the Dawesville works.

On a still day when the Indian Ocean is calm, the Dawesville Channel is a beautiful waterway lined with natural-looking limestone and other local rocks.

Even when the winds roar in from the ocean, it’s easy to forget that the 2.5km, 200m wide waterway was dry land just 20 years ago - part of a continuous strip of coastal land that ran south from Mandurah for about 50 unbroken kilometres.

In a few weeks, it will be 20 years since its opening in April, 1994, by the then newly minted Liberal Party premier, Richard Court, and his transport minister Eric Charlton.

The fresh ocean waters have worked wonders for the estuary over those 20 years - and with the new road, new bridge, marinas and clear, blue clean waters, the surrounding land became a very marketable product.

Asked for comment about the claims of Ralph Blewitt and Hugh Morgan, Lawrence said yesterday: “This does not ring true.” She said she had not had time to refresh her memory on the events. She said she did not wish to make further comment until she had recollected the circumstances surrounding the matters that The Australian emailed her about on Thursday.